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The Bill introduced in Queensland, like those passed in other states, has its origins in the Standing Committee of Attorneys-General’s proposal in 2010 for a nationally-adopted framework for domestic commercial arbitration in Australia based on the UNCITRAL Model Law, and its introduction represents another important step towards a uniform Australia-wide legislative regime.

This most recent step toward uniformity is a useful occasion to explore the key advantages brought about by the new Commercial Arbitration Acts ("CAAs"). The paramount object of the new CAAs is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense (codified at section 1C).

There are five important changes brought about by the new regime aimed at this goal of which parties and practitioners should take particular note.

1. Parties are prevented from litigating in breach of the arbitration agreement

Under the Superseded Uniform Acts, where a party to arbitral proceedings simultaneously brought proceedings in a competent court, the court enjoyed a discretion as to whether to stay proceedings in order to let the arbitration proceed. Under the new CAAs (at section 8), provided there is a valid arbitration agreement, and the subject matter of the dispute is capable of settlement via arbitration, the court is required to stay proceedings while the matter is arbitrated.

This provision strikes a balance between maintaining the courts’ supervisory jurisdiction to ensure that, amongst other things, both parties have signed up to the arbitration process and that the dispute is one that can be resolved by arbitration, and avoiding the scenario where parties, having previously agreed to arbitration as a dispute resolution mechanism, seek to disrupt and delay proceedings by avoiding the arbitral process altogether.

The paramount object of the new CAAs referred to above informs how arbitral tribunals should conduct arbitration proceedings. The CAAs require that the Act be interpreted, and the functions of an arbitral tribunal be exercised, so that (as far as practicable) the paramount object of the Act is achieved (section 1C).

While the parties have latitude to determine applicable arbitral procedure for themselves, this is constrained by being "subject to the provisions of this Act" (section 19(1)). Accordingly, if a situation arises in which the parties' choice of procedure would result in unnecessary delay and expense, a tribunal cognisant of its duty under section 1C would be correct in overriding the parties' choice to better serve the paramount object of the CAAs.

The new CAAs also provide for arbitral tribunals to be able to issue interim measures in order to protect the arbitral process and ensure that the arbitration remains effective as a mechanism of dispute resolution (at section 4A). The scope of such orders is wide and may include such procedural considerations as orders for discovery, the provision of security for costs, the manner in which the arbitral hearings are run, and orders as to the preservation of evidence and assets (see section 17).

It should be noted that these powers in relation to arbitration are simultaneously enjoyed by the courts; a party may apply to a Tribunal and have the interim order enforced by the courts, but also may – under the new CAAs – apply directly to the courts for interim measures such as Mareva and Anton Piller orders. Ex parte orders may only be issued by the courts.

3. Confidentiality is an essential feature of domestic commercial arbitration

Though internationally it had long been accepted that confidentiality was effectively an inherent feature of commercial arbitration, the High Court of Australia held in Esso v Plowman that confidentiality was an obligation on parties to an arbitration agreement only where that obligation was explicitly specified in the agreement.

For the avoidance of doubt, and to ensure that parties gain the benefit of arbitration as a confidential process, the new CAAs provide extensively for confidentiality obligations that are presumed to apply unless the parties opt out. Taken together with, for example, the ACICA Rules on Arbitration, domestic arbitration in Australia is therefore able to be subject to a comprehensive confidentiality regime designed to protect the commercial interest of the parties from the disclosure of sensitive information, or from reputational harm arising from public knowledge of the dispute.

4. Judicial review is generally limited to ensuring the structural integrity of proceedings

Judicial review of arbitral awards under the Superseded Uniform Acts was available on the grounds that the award contained a manifest error of law (section 38), or that there had effectively been a procedural unfairness done to one or both parties via the somewhat indeterminately titled “arbitrator misconduct” (section 42).

While the threshold test for the court’s intervention on the grounds of error of law remains basically the same as that codified by the High Court in Westport v Gordian Runoff of “obvious error of law on the face of the award”, leave of the court to appeal an award is no longer the only requirement for a challenge on this basis. Rather, under the new CAAs (section 34A), for all arbitration commenced after the introduction of the new legislation, the parties must agree that the award may be appealed on these grounds. As a matter of practice, this should form an explicit term of the arbitration agreement as at least one party is highly unlikely to agree after an award has been issued that it may be challenged.

The natural justice obligations on arbitrators to hold proceedings in a manner equitable to both parties have been clarified. Now, specific procedural fairness requirements in the new CAAs such for an impartial arbitrator (section 12) and the equal hearing of both parties (section 18) allow the courts to ensure the structural integrity of proceedings is maintained, but reserve intervention on the substantive issues where parties have expressly agreed on that recourse. This change ensures that parties are given a fair hearing but also that the arbitrator’s decision is final and binding, avoiding the scenario of Cole v Gebauer (2012) where, at the time of the last in a long series of court hearings regarding an arbitration, proceedings had been on foot for 10 years and 21 days!

5. Enforcement of awards

Finally, the new CAAs provide for easy and efficient enforcement of arbitral awards, and very limited grounds for non-enforcement. In bringing states that have adopted the new legislation into line with the UNCITRAL Model Law, the new legislation takes a strongly pro-enforcement stance, and where a party can demonstrate that an award has been properly issued against a party to that award, the court must enforce it, unless to do so would run counter to the most basic notions of morality.

Conclusion

The introduction of the Commercial Arbitration Bill in Queensland, together with the commencement of the CAAs in Western Australia and Tasmania, is a further step in the creation of a uniform arbitration regime that is consistent with world's best practice. Together with the International Arbitration Act for non-domestic arbitration, the new domestic regime gives parties and practitioners access to a reliable, efficient, and final method of dispute resolution in a strongly supportive judicial environment.

Thanks to Patrick Caldwell for his help in writing this article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.